Earlier today, the Bank of Japan (BOJ) decided to raise its interest rates from -0.10% to 0.10%; ditch its Yield Curve Control policy and not target 10-year bond yields, and end ET and J-REIT purchases and reduce its commercial paper and corporate bond purchases.
BOJ members have been busy!
Unfortunately for yen bulls, JPY is weakening against its major counterparts. One possible reason is that we’re seeing a buy-the-rumor, sell-the-news situation as traders have been pricing in the BOJ’s policy pivot for weeks.
NZD/JPY Daily Forex Chart by TradingView
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on the Japanese yen and the New Zealand dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
If the yen continues to weaken against counterparts like the New Zealand dollar, then NZD/JPY may get more attention from the bulls. As you can see, the pair is consolidating just above the daily chart’s 100 SMA and a trend line support that hasn’t been broken since August 2023.
In this case, NZD/JPY’s consolidation also lines up with a resistance zone from late 2023 and the 61.8% Fibonacci retracement of February’s upswing. What’s more, Stochastic is signaling a possible departure from the pair’s “oversold” conditions!
A bullish breakout of the March consolidation could draw in more NZD/JPY bulls and push the pair to a new upswing. NZD/JPY could revisit areas of interest like 92.00 or its previous 93.45 highs, or even make new 2024 highs if there’s enough fundamental catalyst.
Don’t discount a possible trend breakout though!
If more traders are convinced that the BOJ is entering a hawkish era, then JPY may gain traction, and counterparts like NZD may attract sellers.
NZD/JPY could trade below its trend line support and hang out near inflection points like 90.00 before aiming for lower areas of interest.
What do you think? Can NZD/JPY extend its uptrend in the next few days?
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